Philpott defends controversial tax change proposal before doctors

Federal Health Minister Jane Philpott defended controversial proposals to change the tax code in front of an audience of doctors Monday, but assured them they’ll be listened to in the consultation process and that doctors need to be fairly paid.

Doctors at the annual Canadian Medical Association conference quizzed Philpott in a Q&A session on a range of issues, including the hot-button topic of changes the Department of Finance is proposing that would clamp down on a practice it calls “income sprinkling.”

Finance’s proposals would tighten rules on a practice that incorporated Canadians can use to distribute their income among family members for tax savings purposes – making it more difficult to re-distribute income, especially with family members under the age of 25. The changes also would affect passive income investment and converting a private corporation’s income into capital gains, but income sprinkling has been the contentious issue among doctors.

Philpott defended Finance’s proposal at the CMA conference, saying the proposals are aimed at addressing the issue of fairness in the system.

“Does it make sense to create a system where some of you in the room can take advantage of [financial] mechanisms in a way that others can’t?” she asked.

“If you are someone who has a spouse who makes significantly less income than you, or you have adult children of a certain age, 18-24, then you can take advantage of legitimate rules that currently exist to reduce your personal income tax burden.

“But the person sitting across from you who is single, who has very young children, no children, children who are all grown up and making their own income, (is) going to have to pay much more tax than you. That doesn’t seem fair. Those are the kinds of things we’re looking at.”

Philpott said she “absolutely” believes that doctors need to be “fairly paid for the very important work they do in society” and that their concerns will be seriously considered in the consultations.

Philpott also urged doctors to read the consultation document before commenting and said misinformation is already being spread about the proposals, including stories suggesting the possibility of incorporation is being shut down.

“That is absolutely false. The ability to incorporate will continue,” she said. “The proposals have nothing to do with the ability of doctors … to deduct expenses.”

The CMA itself has said that the changes will have “serious and unfair” ramifications for physicians and told the Globe and Mail that Ottawa doesn’t fully understand the negative consequences the changes will have on physicians.

Provincial medical associations have been actively campaigning against the proposals. The head of the Ontario Medical Association, Dr. Shawn Whatley, quickly panned Philpott’s answers about the changes on Twitter.

Doctors also quizzed Philpott Monday on pharmacare and the Liberal government’s plans for legalizing recreational cannabis, which she defended.

Philpott also boasted in her speech Monday about landing the final plank in the health accord with Manitoba’s signature, and the number of supervised drug consumption sites the Liberals have approved so far. That figure has grown to 16 in total, 14 of which were approved after the government passed legislation that makes it easier to put together a site application. Meanwhile, the country’s burgeoning opioid crisis is expected to be a hot topic at the doctors’ conference on Tuesday.